Major players in the alcohol industry such as Molson Coors are eyeing potential investments in the recreational cannabis market.

The nationwide legalization date for cannabis in Canada has officially been set for October 17, 2018 and with eight states in the US having already legalized recreational cannabis, the industry is set to continue to grow. To take advantage of this new legislation, major players in the alcohol industry such as Molson Coors are eyeing potential investments in the recreational cannabis market.

Multiple sources have told BNN Bloomberg that Molson Coors Brewing Co. has been reaching out to Canadian cannabis companies in regards to a potential investment. According to their sources, the beer giant is interested in collaborating with cannabis companies on developing cannabis-infused beverages. An official partnership would allow the company to enter the cannabis market well before the drug is legalized in Canada. In fact, the company has been discussing potential partnerships with as many as four different cannabis companies, including Aphria Inc. and Aurora Cannabis Inc., in the past six months. According to BNN, the company’s interest in the cannabis market is said to be serious and the alcohol manufacturer could announce an official partnership before the end of the year.

This move comes after Molson’s stock experienced a three year low, however, on Friday the company’s stock rose 2.5 percent, which is the largest single-day gain the company has experienced since March 26. However, Molson isn’t the only alcohol manufacturer that has experienced a decrease in sales over the years; according to a recent study, alcohol sales dropped by 15 percent in American states that legalized cannabis. The study, conducted by two US universities and one South American university, found that this reduction in alcohol consumption is directly related to the rise of medical marijuana laws. Considering this trend, it makes sense that alcohol companies are wary about the nationwide legalization of cannabis in Canada.

In addition, a report by Cowan & Co found that cannabis and alcohol are substitute social lubricants to each other. The report also claims that as marijuana becomes legalized in more US states, alcohol consumption is expected to decrease.

“Our analysis found that adult-use cannabis states also have consumers that report meaningfully lower quantities of alcohol consumed per binge drinking session, relative to medical and non-cannabis states,” said Vivien Azer, a senior analyst covering beverage and tobacco companies at Cowen & Co., who authored the report.

However, Molson isn’t the first alcohol company to be interested in producing cannabis-infused beverages. During the fall of last year, Constellation Brands, one of the largest alcohol producers in the world, invested $191 million in the acquisition of a 9.9 percent minority stake in Canadian marijuana company Canopy Growth. The alcohol giant has already announced that they are interested in producing cannabis-infused beverages. In fact, the company does not plan on marketing these beverages in America until the plant is legalized nationwide. Instead, they’re looking to Canada for their product launch. With the Canadian marijuana market estimated to be worth $2.5 billion by 2020 if it becomes legalized nationwide ($1.1 billion from medicinal and black market sales if it does not become legalized), it seems to be a great place to start. In addition, Canadian medical cannabis producer MedReleaf recently released a “cannabis-inspired beer” that is serving as a preview to an actual cannabis-infused beverage set to be launched after legalization. San Rafael’ 71 4:20 Pale Ale was developed in partnership with Amsterdam Brewery and is available at Beer Store locations, Amsterdam retail stores and on tap at certain bars across Ontario.

However, when it comes to Molson, they might be able to leverage the familiarity of their brand to help them expand to legalized US states. Molson’s Blue Moon craft beer inventor, Keith Villa, has already started cannabis beverage company in Colorado. After a 32-year long career at MillerCoors, the brewmaster set his sights on the growing cannabis industry in North America with his company called Ceria Beverages. According to Villa, his beverages will be similar to beers but will not contain any alcohol. In addition, his THC-based beers will come in three different strengths – light, regular and full bodied. There is no word as to whether Villa and Molson will be working together on THC beers but his expertise might be a great help for the company as they enter a new market.

Canopy Growth CEO, Bruce Linton, told Blomberg that his company plans on expanding into the pharma industry after legalization by conducting clinical trials on certain strains of cannabis to identify which ones can help certain ailments. It’s clear these producers will soon be able to take advantage of two markets: medicinal and recreational cannabis.

“What I think we are is this really disruptive company and both the pharmaceutical and the alcohol companies are gonna find us really annoying because we’re the biggest shake-up that’s happened to either of them in past 50-100 years,” Linton told Bloomberg.

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